On Tuesday, April 2, 2019 you will see a question regarding approval of a Use Tax for the City of Northmoor. This often-confusing tax is already being collected by the both the State of Missouri and by Platte County, but we are not receiving our share because we don’t have a Use Tax ordinance.
Use taxes play two major roles: they make up for lost sales tax revenue when items are purchased from out-of-state in instances where no sales tax is collected, and they help level the playing field for local businesses against out-of-state competitors. Use taxes apply only when more than $2,000 of qualifying purchases are made in a year.
Please read below for more information about this issue before you head to the polls on Tuesday.
What is a Local Use Tax?
A Local Use Tax is a tax placed on goods purchased out of state for use in state. It applies only to transactions where a sales tax was not already charged. To keep things simple and fair, local use tax is applied at the same rate as the sales tax.
Why is the Local Use Tax on the ballot?
Platte County, the State of Missouri, and many Missouri cities already have a use tax on the books. Our city needs to pass a use tax in order to collect this revenue that we are missing out on.
Who pays the Local Use Tax?
You don’t pay the Local Use Tax unless you buy over $2,000 in merchandise a year out of state, on which no sales taxes are collected. Both the state of Missouri and Platte County already collect local use taxes. If you do not already pay these, you will not be affected by Northmoor’s local use tax.
What is the proposed Local Use Tax rate?
The State of Missouri mandates that any Local Use Tax be applied at the same rate as the Local Sales Tax. In Northmoor, the current base sales tax rate is 1.5%, so the local use tax base rate would also be 1.5%.
What if I already paid a sales tax on an out-of-state purchase?
No use tax is applicable if you already paid sales tax on an out-of-state purchase.
Is the Local Use Tax a double tax?
No. If sales or use taxes are charged at the time of the purchase, then no further taxes are applicable.
What goods are subject to the Local Use Tax?
Any goods purchased out of state for which no tax has been paid. Exemptions do exist for purchases for resale, manufacturing and non-profits.
Does the Local Use Tax apply to private vehicle sales?
No. The usual city sales tax would apply to this purchase.
How is Use Tax paid?
Businesses generally file Use Tax Returns along with their sales taxes. For individuals, the State of Missouri relies on self reporting on a use tax return if the individual has more than $2,000 in purchases that would be subject to use taxes. For simplicity, if you are filing a use tax return now, you would add the city portion. If not, there is nothing to report.